Genome and antigenome synthesis of negative-strand RNA viruses is initiated at promoters located in inverted terminal repeats (ITR). The ITR of Borna disease virus (BDV), a persisting neurotropic virus with a nuclear replication phase, are exceptional in that they appear to be noncomplete. Our analysis showed that the vast majority of genomic and antigenomic RNA molecules of BDV lack four 5'-terminal nucleotides required for perfect complementarity with the 3' ITR. By using a previously undescribed reverse genetics system, we investigated whether the structure of the ITR would affect virus propagation. BDV rescued from cDNA encoding complete ITR (rBDVc) showed wild-type virulence, whereas virus rescued from cDNA encoding a viral genome with noncomplete ITR (rBDVnc) was strongly attenuated. Both recombinant viruses expressed similar RNA and protein levels in persistently infected cells. However, rBDVnc particles were less infectious, indicating that complete ITR are required for high viral replicase but not transcriptase activity. Interestingly, genomic RNA from purified rBDVc particles lacked 5'-terminal nucleotides like authentic BDV, strongly suggesting programmed genome truncation. By specifically trimming its genome at the 5' terminus, BDV seems to limit viral genome amplification, which may favor noncytolytic viral persistence.